Effects Of Network Power Allocation On Enterprise Competitive Advantage

In1980s, refocusing strategy of multi-national company and internal verticalanti-integrity modular deconstruction enabled production network to spread worldwide，resulted in the co-existence of localization and globalization. With the fragmentation anddecentralization of industrial value chain development, the global production networkgovernance question has been important in management practices. Multi-nationalcompanies hope to tightly control the core sections including R&D, marketing, serviceetc. through separating low value-added section in global production network.Developing country enterprises expect to acquire advanced technology, to accumulatecapability, to promote competitive advantages, to realize upgrading by utilizing globalproduction network. With the increasing competitive advantages, GPN competition ischanging, and the formation and development of network power is the consequence inemerging markets, and the key to realize self-development and participating globalcompetition to promote competitive advantages.Studying the formation path of enterprise competitive advantages of network powerin global production network follows the advanced research of competitive advantagetheory, and the theoretical foundation of upgrading from low value added to high valueadded in practice for breaking lock-in. According to the basic research topic of networkpower influencing competitive advantages, this research comprehensively use literaturereview, theoretical research, the grounded theory research, quantitative research andvertical case study, gradually analyses three main questions including network powerconcept and dimensions, relationship between network power and competitiveadvantages on static perspective and the dynamic development of network powerinfluencing competitive advantages on dynamic perspective. After research, threeconclusions are reached:(1) Network power is an enterprise level concept, including construction power,referent power, institution power and technology power. This research combines theresults of normal analysis with theory deduction at the core and qualitative conclusionwith grounded theory at the core, defines network power as: in a certain industrial globalproduction network, the capability of node enterprise to motivate or drive otherenterprises to realize its will, to satisfy its interest, based on the resource difference.Network power includes construction power, referent power, institution power and technology power, the nature is the influence and control of the target enterprise towardsothers in production activities. It is to consolidate and complement the concept of powerbased on the theory of capability, and as to the research on the detailed dimensionsexpresses the key resources and the sources of network power in global productionnetwork. Compared with existing theories, structural power and knowledge powerhave been discussed in current research, the connotations are the same. As to referentpower and institutional power, under qualitative information, this research realizes themanipulation of the concept, develops scale and is adopted in quantitative research. Theresults show that this research has a positive reliability on the whole concept.(2) Network reconstruction mode has intermediation function on the procedure ofenterprise network influencing competitive advantages. This research discusses theimprovement path of enterprise competitive advantages through network power,focusing on the core of production network governance, institution arrangement question,searching the powers in gaining enterprise competitive advantages and its path transmitsmechanism. The results show that knowledge chain reconstruction only has fullmediation in technology power influencing competitive advantages, whereas structureautonomy has an intermediation impact on construction power influencing competitiveadvantages. The result fully proves and explains the specific path to acquiringcompetitive advantages for new markets: construction power transmits to competitiveadvantages through diffusion function of structural autonomy. Technology powertransmits to competitive advantages through subversion function of knowledge chainreconstruction.(3) Innovation mode has a cross adjustment function in network power influencingenterprise competitive advantages. Combining activism and knowledge-based view inadvanced development of competitive advantage theory, this research introducesinnovation mode as a knowledge usage to the institutional reconstruction process ofglobal production network, and searches the acquirement process under the interactionbetween innovation mode and network power. Research results show that the interactionbetween enterprises’ technology power and radical innovation mode could have animpact on existing knowledge chain of GPN, and constructs its own competitiveadvantages through reconstructing knowledge chain.(4) Network power has circulated accumulation on influencing competitiveadvantages. Based on constructing the dynamic evolution model between network powerand competitive advantages, this research adopts HUAWEI technology ltd. Company asvertical case study to research detailed and deeply. Putting enterprise practice on verticaltime line, it is found that there is a circulated accumulation cause and effect betweennetwork power and competitive advantages. The results show that there has reciprocalcausation relationship between network power and competitive advantages, theaccumulation of network could increase competitive advantages through reconstitution network organization, the increasing competitive advantages in this section couldtransform into part of key resources, and will become the origin of network power innext section.To sum up, this research focuses on the perspective of developing countryenterprises in low value added zone of the value chain. Through adjusting the controland influence on key resources in global production network, reaching institutionalrestructure exceeds other competitors on issues of interest and effectiveness, whosenature is the question of global production network governance. The conclusion hasreference function in choosing effective upgrading path and realizing role transformationfor enterprises.